A Personal Finance and Investment Arm of The Business Times


About Bungalow Investing

What has the tour guide and the widow’s bungalow got to do with investing?

The talk of the town has been the case of the tour guide and the widow, or rather arguably, the main talking point of interest may have been the $30 million bungalow.

The “status symbol” factor in investing?

In investing, a seldom discussed aspect of deciding what to invest in is? - Is the investment perceived as a “status symbol”?

What do I mean by “status symbol”?

Well, it’s about the general perception as to whether people may want to own the investment because it makes them feel good - they can tell their friends and be seen as having made it in life, etc.

So, a bungalow in my view falls into this definition - as a good example.

Best investment “type”?

One of the reasons why of all the residential property types, historically - bungalows have had the highest rate of return - may be that everyone aspires to own one, most may not be able to afford one, and most important of all - owners may be reluctant to sell it because it may be seen as a loss of face or the loss of a “prestige” status. (Source:

Supply considerations?

Normally, the number of bungalow transactions in a year can be counted in the tens or scores only.

Affordability considerations?

As to not being able to afford - have you thought about maybe four persons buying one together? If so, I suggest you think carefully and seek legal advice about the implications.

For example, it may need to be titled under tenants-in-common, instead of the usual joint-tenancy. In a joint-tenancy, the title cannot be severed such that on death, the survivors will inherit the deceased’s share. In other words, the joint owners’ share cannot be willed or sold away.

In contrast, for tenants-in-common - a joint owner may be able to sell or will away his or her share.

And of course, you must trust all the other joint owners and be on very good and close terms with them. Otherwise, all kinds of problems may arise in the future.

So, if bungalows have been the best investment type - which residential property type has been the second best?

Second best residential property investment “type”?

Well, I believe you will be surprised - it is probably 2-room HDB flats.

Here again, this will illustrate another consideration in deciding what or when to invest in what?

- Demand and supply, and policy implications on demand and supply.

The trend has been for people to downgrade in their retirement. So, the cheapest resale flat to downgrade to is a 2-room HDB resale flat, especially if one is not able to meet the various criteria to buy a new BTO HDB 2-room flat..

Also, for many years, very few 2-room flats were built, as well as the old income ceiling of $2,000 household income limit to be eligible to buy a new BTO HDB 2-room flat - which limited the number of people who could buy a new BTO HDB 2-room flat.

Similarly, for reasons of demand, supply and policy implications - 3-room flats have been a better investment than say larger HDB flats.

Outlook for the future? 

The residential property type which has the lowest historical returns have been condominiums, especially the smaller (shoebox) types. Arguably, the reasons may be that it is also a status symbol, albeit not as high a status as bungalows - but still a status symbol nonetheless, because you can say that you own a private property!

But, arguably the most affordable type are the smaller condos, especially with the recent Total Debt Servicing Ratio (TDSR) requirements. So, there is arguably high demand and thus possibly an over-supply possibly, especially in the future.

Generalisation versus specific property type?

By the way, notwithstanding the above, from 1989 to 2014 - the private residential property index (all property types) has generally out-performed the HDB resale price index (all flat types).

According to the Urban Redevelopment Authority (URA), the vacancy rate of completed private homes hit 7.1 per cent in the second quarter of this year - the highest since the first quarter of 2006.

Robin Han
Leong Sze Hian

Dr Leong Sze Hian is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, has authored 4 books, quoted over 1500 times in the media , has been host of a money radio show, a daily newspaper column, Wharton Fellow, SEACeM Fellow, acting managing editor and columnist for theonlinecitizen, columnist for Malaysiakini, a Member on the CIFA International Advisory Board, executive  producer of the movie Ilo Ilo (8 international awards), treasurer of Maruah, and invited to speak more than 100 times in more than 25 countries on 5 continents. He has served as Honorary Consul of Jamaica and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.